Jeff Springer
It’s not uncommon for Berkshire Hathaway to acquire large stakes in companies, however, the company’s founder, Warren Buffett, rarely spends his own money on stocks. That’s what made his purchase of 2 million shares in Seritage Growth Properties this week so special.
His 2 million shares are worth 8% of the company and Buffett is now the company’s second-largest shareholder.
Shares of Seritage jumped 17% after the famed-investors position was revealed.
Seritage is the real estate investment company that was spun off by struggling retailer Sears in early 2015.
Seritage owns 262 retail locations. Most of those builds are Sears or Kmart stores.
Seritage purchased the buildings from Sears and Kmart (which is owned by sears) and then leased the properties back to the Sears and Kmart stores.
The real estate holdings company is a joint venture of Simon Property Group, General Growth Properties, and Macerich.
Sears has racked up annual losses since 2011 and sales have fallen in every year since 2006.
The real estate was spun off after investors convinced Sears’ CEO Eddie Lampert to separate the businesses.
Other assets to be spun off in an attempt to raise cash have included Sears Canada and Lands’ End.
Warren Buffett has not yet explained why he would invest in such a large share of Seritage.
As a real estate investment trust, Seritage must pay at least 90% of its taxable earnings back to shareholders, one reason Buffett may have purchased a large holding in the company.
Berkshire Hathaway has often bought preferred stakes in companies investments that usually pay higher dividends to their investors than the common stock.
Last month Seritage said 22% of its revenue came from third-party tenants which include Walmart, Dick’s Sporting Goods, Nordstrom Rack, and Lands’ End.
Perhaps Warren Buffett is placing an increasing amount of support behind US consumer sentiment.
